How to invest the sale of the house

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It looks as if mum's house will sell in January. She needs to generate about £1k each month to pay the balance of care home fees after pension and other investments. House will release about £500k.
We are so very lucky to have first world problems like this - and if she needs to use capital none of us children will starve for lack of inheritance so that's also an option. How would you use it and where should she put it?
I have borrowed from my future self
The banks are not our friends

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  • bigfreddiel
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    Put the proceeds into an NS&I income bond at first, totally safe and will pay you a monthly sum of £416

    Then see an IFA, explain the objectives and they will arrange a tax efficient way of funding the care home fees. The IFA will charge about 1% for the advice and a bit more to set it all up, say £5,000 plus vat. Get quotes from at least three IFAs

    Dunsty boy will be along in a minute to offer a more professional observation.

    Whatever you do don't rush into anything, take your time and query anything you don't understand, there no such thing as a stupid client, only a stupid IFA

    Good luck fj
  • Strolls
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    Some mix of world index funds + government bonds, or a product life the Vanguard Lifestrategy 40 or 60 which does it all for you.

    Your mum is in a fortunate position, as the safe withdrawl rate is around 3% (if she's old enough to need full-time care, then hers is probably higher), so I would feel confident withdrawing £15,000 a year from a £500,000 portfolio.

    Apparently I'm not allowed to post links yet, but search "morningstar safe withdrawal rate" - the first link looks like a good explanation of the concepts involved (alternatively "bengen safe withdrawal rate" will also get you some good introductions), the second link is a PDF titled "Safe Withdrawal Rates for Retirees in the United Kingdom". If you look on page 12 of that, it has some tables giving probability of success rates for various stock:bond mixes.

    Read Tim Hale's Smarter Investing before speaking to a financial advisor. HTH.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    The other option is an immediate care needs annuity, you'll need to speak to a specialist ifa about this.

    This would guarantee to cover care home fees for life, you'll need to get specific quotes and it might be, or at least appear to be, expensive as the provider is taking on risk regarding life expectancy over and above that anticipated.
  • Biggles
    Biggles Posts: 8,209 Forumite
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    bigadaj wrote: »
    The other option is an immediate care needs annuity, you'll need to speak to a specialist ifa about this.

    This would guarantee to cover care home fees for life, you'll need to get specific quotes and it might be, or at least appear to be, expensive as the provider is taking on risk regarding life expectancy over and above that anticipated.
    I was very glad I had done that; as I became responsible for her money, it gave me reassurance that she (I) would never run out of cash.

    My siblings thought, to begin with, that it was a lot of money to splash out from their inheritance but, when I pointed out that one alternative was that she would live for years, need to be moved to a home of the council's choosing and leave no inheritance at all, they saw sense.
  • Pincher
    Pincher Posts: 6,552 Forumite
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    My understanding is annuities do not count as part of the estate for inheritance purposes.

    So, if she has £650k of IHT allowance (mother and father, £325 x 2), and her estate is £850k, then using £200k to buy an annuity, leaving her estate at £650k, so there is no IHT to pay.
  • bigfreddiel
    bigfreddiel Posts: 4,263 Forumite
    edited 26 December 2016 at 8:29PM
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    Strolls wrote: »
    Some mix of world index funds + government bonds, or a product life the Vanguard Lifestrategy 40 or 60 which does it all for you.

    Your mum is in a fortunate position, as the safe withdrawl rate is around 3% (if she's old enough to need full-time care, then hers is probably higher), so I would feel confident withdrawing £15,000 a year from a £500,000 portfolio.

    Apparently I'm not allowed to post links yet, but search "morningstar safe withdrawal rate" - the first link looks like a good explanation of the concepts involved (alternatively "bengen safe withdrawal rate" will also get you some good introductions), the second link is a PDF titled "Safe Withdrawal Rates for Retirees in the United Kingdom". If you look on page 12 of that, it has some tables giving probability of success rates for various stock:bond mixes.

    Read Tim Hale's Smarter Investing before speaking to a financial advisor. HTH.

    The last few replies show why a DIY approach isn't the way to go in this case. You need to see an IFA - it will cost a relatively small amount from the £500k and at the end of the day it is the best thing you could do for your dear old mum.

    Hopefully old Dunsty will pop by soon once he's polished off the last mince pie and clotted cream with his thoughts.

    Merry Xmas fj
  • xylophone
    xylophone Posts: 44,585 Forumite
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    Hopefully old Dunsty will pop by soon once he's polished off the last mince pie and clotted cream with joists thoughts.

    Raising the roof?:)
  • bigfreddiel
    bigfreddiel Posts: 4,263 Forumite
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    Flipping autospillers!
  • xylophone
    xylophone Posts: 44,585 Forumite
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    Flipping autospillers!

    Sure it's not a case of glass wobble?:D
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